He used the money to fund a series of trips to Europe, including one to judge a literary competition in Paris.

The admission, in a hearing at the Old Bailey, followed more than four years of scrutiny of MacShane's use of Commons allowances.

The parliamentary authorities began looking at his claims in 2009 when the wider scandal engulfed Westminster, and referred him to Scotland Yard within months.

But the principle of parliamentary privilege meant detectives were not given access to damning correspondence with the standards commissioner - in which MacShane detailed how signatures on receipts from the European Policy Institute (EPI) had been faked.

The body was controlled by MacShane and the general manager's signature was not genuine. One missive, dated October 2009, told how he drew funds from the EPI so he could serve on a book judging panel in Paris.

It was not until after police dropped the case last year that the cross-party standards committee published the evidence in a report that recommended an unprecedented 12 month suspension from the House.

MacShane, who served as Europe minister under Tony Blair, resigned as MP for Rotherham last November before the punishment could be imposed.

Police then re-opened their probe in the light of the fresh information and the 65-year-old was charged in May - even though the letters are still not thought to be admissible in court.

The offence of false accounting covered 19 "knowingly misleading" receipts that MacShane filed between January 2005 and January 2008.

Asked to enter a plea at the hearing in Court Two today, MacShane - wearing a dark suit with white shirt and striped tie - replied firmly: "Guilty."

Mr Justice Sweeney told the politician as he stood in the dock: "You will understand, I'm sure, that all sentencing options remain open to the court."

He was granted unconditional bail until sentencing on December 19. The maximum jail term available is seven years - although MacShane is likely to get less.

MacShane refused to comment to journalists outside the court. He is understood to accept that he made a "grotesque mistake", but argues there was no personal gain from the claims.

He has insisted that he told police "everything and more" that he told the Standards Commissioner before the criminal case was initially dropped.

A CPS spokeswoman said: "The decision to charge was reached following a reconsideration of the case after the publication of the Select Committee report."

MacShane joins a list of politicians prosecuted as a result of the expenses scandal.

They include fellow former Labour minister Elliot Morley, as well as MPs Jim Devine, David Chaytor and Eric Illsley.

Tories to fall foul of the law were Lord Hanningfield and Lord Taylor of Warwick.

Sentences have ranged from nine to 18 months.

Another ex-Labour MP, Margaret Moran, was spared prison and given a supervision order instead after suffering mental health problems.